YEAR AT A GLANCE
Welcome to Partnership Benchmark 2022, the third successful edition of our study. Once again we had fantastic participation from close to 100 IT leaders across 70 of the top Belgian companies and government organizations - all done through one on one interviews. We reviewed performance on more than 200 contracts and have evaluated 18 of the top IT service providers in Belgium.
A look back at 2022
2022 began with hope and dynamism. We were in a post-COVID environment with increased consumer spending and renewed global confidence. Just as things started to look good, the war in Ukraine started plunging the world and particularly Europe in crisis. We were hit by several challenges including the energy shock, supply side shortages and long forgotten hyper-inflation. The future looks uncertain once again and two out of three clients in our survey indicated that their IT budgets will either remain flat or will shrink this year.
The war for talent that we saw last year continues unabated as we predicted last year. It remains difficult to source new talent particularly on new technologies and cloud skills. Attrition levels at offshore, while having reduced somewhat still remain unsustainably high (20-30%). As work from home remains the norm at offshore, there is not sufficient proximity between senior and junior staff - an essential ingredient for the success of the pyramid driven offshore model. This is affecting not only the ability to train and coach junior staff but also employee engagement levels. Combined with the high attrition, this is causing severe performance issues as indicated by several clients and is testing the limits of the offshore model. More on this in our article – The Limits of Offshore.
2022 saw a lot of service providers requesting contract renegotiations and looking for clients to share some of the costs of hyper wage inflation. Cost adjustments of 10-15% were seen in several contracts. This puts high pressure on the CIO who is often faced with a flat or even reducing budget.
The strong migration to public Cloud also continues its steady march. More and more organizations (with the exception of financial institutions) made strong progress into moving a majority of their workloads into the cloud. However, many organizations who made the move found the going tough. Firstly, most organizations are ill prepared to operate in the cloud, lacking the required internal skills around cloud governance and architecture. Cloud skills are not easily available with the service providers, a situation made worse with the ongoing attrition. Many CIOs found their cloud costs exploding without proper financial governance and FinOps. The relative immaturity and lack of experience on DevOps or DevSecOps made matters difficult. No wonder, client satisfaction levels for Cloud services seriously lag behind Application services.
The move to cloud also has a significant impact on both the nature and size of infrastructure contracts, and on the companies that relied previously on datacenter services for a large part of their revenue. More on this in our article – No place like Cloud.
The technical revelation of the year was no doubt ChatGPT. With 100 million monthly active users, it became the fastest growing application in human history. While it can already churn out poetry, software code and interact like a human, we strongly believe that this is just the start of the AI revolution which will transform the way we work and live.
This year we have adapted our assessment model. We realized that while our study provides a local lens, service provider capabilities are often global. The Y-axis was hence renamed to “Local Market Impact” which we believe is more appropriate as compared to "Scale/Capability". Also we have adjusted the way we measure this Market Impact and have provided more transparency into the model. You can find more details in the section – Method.
Here are some highlights of this year’s study:
Accenture, Capgemini and TCS retain their Leader position for Applications and Digital services.
Accenture, Deloitte, PWC, DXC and Cognizant stand out on Digital Transformation
Kyndryl remains the sole leader in Cloud/Infrastructure services as Atos drops out due to low client satisfaction.
PWC marks its debut into our squares with very high satisfaction scores
We hope you enjoy reading this year’s report. This year we will also have a client event to present the results and hear interesting experiences from some leading CIOs, over a nice dinner in an exclusive setting. This is being planned for end-April beginning May. Looking forward to seeing you there!
Vikrant & Geert